Chapter 6

Question 1

A statement that lists account names and their balances, recorded in debit and credit columns, on a certain day

Answer 1

Trial balance

Question 2

The value of inventory that has remained unsold at the end of the financial year

Answer 2

Closing inventory

Question 3

Goods ready for sale after having gone through the manufacturing process

Answer 3

Finished goods

Question 4

Items that are not yet completed and only partly made

Answer 4

Work in progress

Question 5

Inventory that a business has at the start of the year. Represents an asset and hence will be a debt balance. Last year’s closing inventory

Answer 5

Opening inventory

Question 6

Errors that occur when a transaction is completely omitted from the books

Answer 6

Errors of omission

Question 7

Errors that occur when the correct amount is entered, both debit and credit, but one of the entries is made in an account belonging to a different class

Answer 7

Errors of principle

Question 8

Errors that occur when the correct amount is entered, both debit and credit, but in the wrong account of the same class

Answer 8

Errors of commission

Question 9

Errors that occur when two or more errors cancel each other out

Answer 9

Compensating errors

Question 10

Errors that occur when an incorrect figure was used to record a transaction, both debit and credit

Answer 10

Errors of original entry

Question 11

Recording a total that is more than the true total

Answer 11

Overcast

Question 12

Totalling

Answer 12

Casting

Question 13

Errors that occur when the correct amounts are used but double entries are made on the wrong side of the accounts concerned

Answer 13

Errors of complete reversal of entries

Question 14

Trial balance

Answer 14

A statement that lists account names and their balances, recorded in debit and credit columns, on a certain day

Question 15

Closing inventory

Answer 15

The value of inventory that has remained unsold at the end of the financial year

Question 16

Finished goods

Answer 16

Goods ready for sale after having gone through the manufacturing process

Question 17

Work in progress

Answer 17

Items that are not yet completed and only partly made

Question 18

Opening inventory

Answer 18

Inventory that a business has at the start of the year. Represents an asset and hence will be a debt balance. Last year’s closing inventory

Question 19

Errors of omission

Answer 19

Errors that occur when a transaction is completely omitted from the books

Question 20

Errors of principle

Answer 20

Errors that occur when the correct amount is entered, both debit and credit, but one of the entries is made in an account belonging to a different class

Question 21

Errors of commission

Answer 21

Errors that occur when the correct amount is entered, both debit and credit, but in the wrong account of the same class

Question 22

Compensating errors

Answer 22

Errors that occur when two or more errors cancel each other out

Question 23

Errors of original entry

Answer 23

Errors that occur when an incorrect figure was used to record a transaction, both debit and credit

Question 24

Overcast

Answer 24

Recording a total that is more than the true total

Question 25

Casting

Answer 25

Totalling

Question 26

Errors of complete reversal of entries

Answer 26

Errors that occur when the correct amounts are used but double entries are made on the wrong side of the accounts concerned

Question 27

What are the purposes and uses of a trial balance?

Answer 27

To prepare the income statement and the statement of financial position
To verify accounting records
To help locate errors

Question 28

Which errors will show up in the trial balance?

Answer 28

Arithmetical errors, using different figures for matching debit/credit entries, entering only one aspect of a transaction, entering a transaction twice on one side (two credits instead of a debit and a credit)

Question 29

Which errors don’t show up on the trial balance?

Answer 29

Compensating errors, errors of commission, errors of complete reversal, errors of omission, errors of original entry, errors of principle